The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index (Index) for May 2017 slightly retreated from April as builders and suppliers digested the huge year-over-year increase in lumber and sheathings. The declines in commodities could be an indicator of weakening demand as cost erodes the affordability of new projects. The next few months will test this theory as additional lumber tariffs are in the offering at the end of June. At some point, will builders move from Western Canadian spruce to pine as so many pine producers had hoped for—we will see.
Over the last 30 days, the Index dropped 0.3 percent to $32,796.99, with most non-commodity items remaining steady and looking for some sort of market direction.The following items were the notable price movers in this month’s Index:
At this point, the concern for additional tariffs should be spooking the markets. I have yet to see any of this. Maybe the extra costs are baked in or maybe builders and suppliers have become ambivalent to the continuous price increases. These would be better reasons than softening housing demand.The politicians in Washington, D.C. need to tap down the bickering and chaos somewhat or that along with inflationary pricing could begin to erode housing demand. Affordability and political chaos at this point seem to be the two biggest threats to the housing market.
Let’s see if the spring pricing increases have the legs to run into summer. At this point, I am skeptical.
The Ro-Mac Lumber & Supply, Inc. Whole House Commodity Index is based on wholesale costs of the base components to build a 2,200 square foot wood frame home with a concrete stem wall in Central Florida. The Index includes foundation, metal, concrete, block, stucco, cement, wood framing, siding, sheathings, trusses, roofing, drywall, insulation, windows, doors, trim, garage doors, and most building hardware. It does not include décor, electrical, plumbing, mechanical, landscaping, or labor. Because the Index uses current wholesale costs, this should be a strong indicator of the direction of building prices for the next 30-45 days.
Don Magruder is the Chief Executive Officer of Ro-Mac Lumber & Supply, Inc. in Central Florida. Go to www.romaclumber.com to sign-up for the Index and other free market reports. To sign-up for this information via email, contact Rebecca Ballash at